INTERNATIONAL: Red Tape Cutter

When they adopted lusty, Boston-born Leon Fraser at the age of 18 months, wealthy Mr. & Mrs. Ronald Bonar little thought that in Basle, Switzerland last week the Directors of the Bank for International Settlements would unanimously elect him President.

Smart, brisk Banker Fraser is only 43. By training a lawyer, he has never worked in a bank which received or paid out cash. At Basle they send and receive cablegrams and telegrams transferring millions and hundreds of millions, on paper. Often a telephone call suffices. In their safe, some two feet wide by four high, they keep as a solemn joke two coins, a tiny 25¢ California gold piece (genuine) and a reputed Spanish sovereign (counterfeit). The important thing is that since the B. I. S. was founded in 1930 it has slowly become “The Central Bank of Central Banks”: The World Bank.

Keen, tactful President-elect Fraser sprouted and matured amid the rich mess of Reparations and War Debts. Prior to the War he had been elaborately educated, made up for that by reporting one year for the New York World, next year was admitted to the bar. Enlisting as a private in 1917, he was swiftly promoted to major, and Assistant Judge Advocate of the A. E. F.’s quarrelsome Service of Supply. Decorated with a chestload of Allied medals, he practiced international law with Paris’ Coudert Brothers after the War and sprouted definitely in 1924 as general counsel to General Dawes and the other experts who drew up the Dawes Plan.

When Seymour Parker Gilbert, who is three years younger than Leon Fraser, was appointed Agent General of Reparations in Berlin there seemed no reason why so young a man as Lawyer Fraser should not be appointed the Agent-General’s agent in Paris. Making a huge success of this appointment, Agent Fraser was in at the Paris birth of the Young Plan in 1929. It abolished Reparations as such, abolished the Agent Generalship of Reparations (S. Parker Gilbert cheerfully became a Morgan Partner) and substituted a “businesslike” system of German payments to the Allies through an office at Basle to be named the Bank for International Settlements, nicknamed “Cash Register of the Young Plan.”

Prestige was the prime requisite for the first President of the B. I. S. and who had more prestige than gruff, Scotch-blooded Gates W. McGarrah, then board chairman of New York’s Federal Reserve Bank? On the other hand what U. S. citizen knew the whole European set-up well enough to act as august President McGarrah’s adviser? From the first Banker McGarrah took to Lawyer Fraser. He was elected a

B. I. S. director and the official alternate of President McGarrah.

“Greatly Enhanced.’ President Hoover’s moratorium stopped Young Plan payments, apparently for good & all, but oddly enough the Cash Register of the Young Plan continues to function. Between them President McGarrah, Alternate Fraser and their Board have developed profitable B. I. S. sidelines in handling League of Nations loans, and transfers among Europe’s central banks. In his 1932 report President McGarrah was able to show a B. I. S. profit for the fiscal year of 15,182,818 Swiss francs ($2,929,524) and proudly declared, “It is a satisfaction to confirm that the usefulness and use of the bank . . . for joint financial action has been greatly enhanced during the period of stress. . . .

“Indeed . . . the bank has become more and more an instrument of central bank collaboration.”

World Bank & World Conference. Aged 70 and having launched the B. I. S. with conspicuous success, Gates W. Mc-Garrah hinted last January his intention to retire as President next May. Europe buzzed at first with rumors that a British subject would succeed him. Lately reporters changed their tune, asked Alternate Fraser if he knew he was going to be elected President McGarrah’s successor.

“That,” drawled broad-grinning Mr. Fraser, “is news to me.”

Last week the news became fact. Bankerishly at Basle, members of the Board refused to comment on their unanimous vote. Pikestaff plain, however, looms the fact that President-elect Leon Fraser is slated to play a major role in 1933’s great effort at international recovery, the World Economic Conference.

Sponsored by Prime Minister James Ramsay MacDonald, the Conference is to meet this year in London. Its agenda has been prepared by experts whose chairman was the World Bank’s nominee and delegate, Dr. Leonard J. A. Trip, President of the Netherlands Bank. Unquestionably the world’s central banks will employ the mechanism of the World Bank in any effort made to solve the foremost problem posed in the agenda: “Restoration of an effective international monetary standard to which the countries which have abandoned the gold standard can wisely adhere.”

By the terms of its charter the World Bank stands 100% for the gold standard. Only nations whose currency is on gold can be admitted to its Board. Once admitted a member is not expelled for going off gold, but the World Bank is the international rallying point for sound, stable money.

As the go-getting champion of this basic principle of world recovery, President-elect Fraser faces a battling, buffeting year, will need all the stamina packed into his tough, square-shouldered frame. Typical of direct, common-sense Fraser methods was the Bank’s settlement last week of the issue of “double taxation” with the City of Basle. Radical aldermen have demanded that the city pry into the private income of each employe of the Bank (already taxed in his home country) and tax it again in Basle. The Bank retorted by offering the city a lump sum payment of 50,000 Swiss francs ($9,647) in settlement of all income tax claims. Last week the city of Basle balloted in referendum of the Bank’s red-tape-cutting offer, accepted it by a handsome majority.